Opsonin Pharma Ltd. Chapter -1 Introduction 1.1 Rationale for Selecting the Report The study was conducted to evaluate the “Compensation and Benefit Analysis” procedure by HR and Admin of Opsonin Pharma Ltd. As the chosen organization is the giant Pharmaceutical company in Bangladesh, I have decided to find out the whole process and procedure of “Compensation and Benefit Analysis” system and practices regarding employment which is used inside the organization and also implemented in the activities based on the previous information and records and their current practices, that I obtained from the organization. 1.2 About Opsonin Pharma Ltd. Pharmaceuticals sector is one of the most high growth and highly profitable industries in the country. At present, pharmaceutical industry is the second largest taxpayer to the countries exchequer. Most of the players of the industry enjoy high profit margin. One of the unique features of the industry is that import is restricted for products that are being produced by two local [1]
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Opsonin Pharma Ltd.
Chapter -1 Introduction
1.1 Rationale for Selecting the Report
The study was conducted to evaluate the “Compensation and Benefit Analysis” procedure by HR
and Admin of Opsonin Pharma Ltd. As the chosen organization is the giant Pharmaceutical
company in Bangladesh, I have decided to find out the whole process and procedure of
“Compensation and Benefit Analysis” system and practices regarding employment which is used
inside the organization and also implemented in the activities based on the previous information
and records and their current practices, that I obtained from the organization.
1.2 About Opsonin Pharma Ltd.Pharmaceuticals sector is one of the most high growth and highly profitable industries in the
country. At present, pharmaceutical industry is the second largest taxpayer to the countries
exchequer. Most of the players of the industry enjoy high profit margin. One of the unique
features of the industry is that import is restricted for products that are being produced by two
local companies. The regulation encouraged local private investors in the sector. Advertisement
being banned for drugs, more emphasis is given on sales force.
Opsonin Pharma Ltd is committed to improve its position continuously as a Leading
Pharmaceutical company in Bangladesh and strengthen its global presence. It creates value for its
customers and other stakeholders by providing highest quality health care solutions through
appropriate application and development of resources and processes.
1.3 Historical Background
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The Opsonin Pharma Limited Started it business operation in 1956 as a partnership business
in the name “ Opsonin Chemical Limited”. In the year 1976 the legal status was subsequently
change & it got listed as private limited company. In 2005 the company was renamed as
“Opsonin Pharma Limited”.
1956-2003 Integrating the visionary imagination for basic industrial development in this country
by our Founder Chairman Late Abdul Khaleque Khan, the successors have already established a
number of innovative & import substitute industrial units mainly in the pharmaceuticals and
related sectors. The seed that was planted in the year 1956 now has become a tree. The way we
walked though was not a smooth and plain one. After a thousand miles walk the plant of distilled
water has now opened a new horizon in Bangladesh pharma industry. From the inception we
always believed in nation building activities. Our cherished dream is to serve the mankind and
the man behind the mankind. This dream has come into reality as a result of thousand miles
throbbing walk of thousand people.
1956- Partnership business started.
1962- Manufacturing of injectables
1976- Enlisted as private limited company
1980- Expanded nationwide marketing & distribution
1982- Manufacturing of antibiotic capsules
1985- Export of products to South East Asia and the Middle East
1996- Manufacturing of suppositories first time in Bangladesh
1997- Manufacturing of soft gelatin capsules
2000- ISO 9001 certification
2003-Site development and planning for new factory
2005-Company name has changed from 'Opsonin Chemical Industires Ltd.' to 'Opsonin Pharma
Ltd.'
Support Division consist of the following departments-
1. Operational: Deals with the processing activities of the business department.
2. Finance: Deals with the financial of organization and reporting.
3. Human Resource: Deals with People of the organization.
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4. Administration: Ensure the smooth running of the organization by providing logistic
support etc.
5. Commercial: Commercial Department deals with purchase of raw materials.
6. Marketing: Deals with the marketing of our Production.
1.4 About Company Profile
Company Address: Corporate Office:
Opsonin Building, 30 New Eskaton Road, Dhaka1000, Bangladesh
Opsonin Pharma Ltd is a manufacturer of the medicines & healthcare products in Bangladesh.
The company is selling its product both in local & international market. Its main market across
the border of Africa, Oceania, Middle East & Eastern Asia. Opsonin Pharma Ltd has adopted the
World Health Organizations (WHO) guidelines on GMP in the quality Management system.
Quality Assurance Procedures ensure that the quality of the products is maintained by strict
compliance with international Pharmacopoeias specification on raw materials, packing materials
& finished products. Opsonin Pharma Ltd has more than 2100 employees which includes
diversified professional team like Pharmacist , Chemist, biochemist, chartered accountant , cost
& management accountant etc. The company has a large sales team of more than 425
professionally trained persons who are confirming the distribution of the products throughout the
country.
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1.5 Vision & Mission and Value of Opsonin Pharma Ltd.Vision of the Company
1. From the very beginning vision of Opsonin company is to produce & supply that type of
medicine which meets the demand of daily life of the people.
2. The prevent from new disease of Opsonin pharmaceutical committed to supply medicine
to the hard to reach area of the country.
3. Opsonin Company is always wants to develop the level of life expectancy of the people.
4. Vision of the Opsonin is established Opsonin permanently among the best innovative
branded generic companies.
Mission of the Company
To provide maximum value to companies’ customers, shareholders, colleagues and communities
where we live and work.
1. Determine market potentialities through research
2. Introducing new innovative sources and technology.
3. Ensuring quality product and services confirm to the international standard.
4. Exceeding customer satisfaction and gaining trust through quality product and services.
5. Expanding the business home and abroad.
Values of the Company
In order to achieve the aspired vision employees should subscribe to the following
For quality all employee do anything. Live up to own commitment Transparent and fair in all dealings Take initiative to exceed standard Believe in continuous improvement
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Believe in Change to bring in timely solution. Work as a team Recognizing achievements, celebrates results Socially responsible.
1.6 Company Organogram:
Overall Organogram
1.7 Objectives of the Study:
The main objective of the study is to finding out the present compensation and benefits of Opsonin Pharma. And also to fulfill the requirement of BBA program. The objective of the study may be viewed as:
To know the existing compensation structure of Opsonin Pharma,
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To evaluate whether the existing compensation and benefit structure is working or not at Opsonin Pharma,
To give recommendation on compensation and benefit,
To submit the practical work as a paper work that I have learned in my three months internship of BBA program.
Chapter: 2 Activities Undertaken
2.0 Duties and responsibility as an Intern
As my report title is “Compensation and Benefit Analysis” Process of Opsonin Pharma Ltd.
and as I mention that I did my internship at Human Resource department so during my internship
I did a lot of work that assigned by my department supervisor. To do all the HR tasks I ha d to
involve in their whole HR activity. Works that have been performed by me are written below:
I did analysis the whole HR practice of OPL.
I analyses the Compensation and Benefit process of OPL.
I have visited the whole office for checking their operations.
I also analyses the employees opinion based on their demand of OPL.
I maintain the whole wages & salary policy which they followed in their activities.
2.1 Human Resource Management of Opsinin Pharma Ltd.
Human Resource Management (HRM) is the function within the OPL focuses on recruitment,
management, and providing direction for the people who work in the organization. Human
Resource Management can also be performed by line managers in OPL.
Human Resource Management is the organizational function that deals with issues related to
people such as compensation, hiring, performance management, organization development,
safety, wellness, benefits, employee motivation, communication, administration, and training.
In OPL HRM is also a strategic and comprehensive approach to managing people and the
workplace culture and environment. Effective HRM enables employees to contribute effectively
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and productively to the overall company direction and the accomplishment of the organization's
goals and objectives.
OPL has more than 2,100 employees which includes diversified professional team like
pharmacist, chemist, biochemist, microbiologist, engineer, medical professional, IT professional,
chartered accountant, cost and management accountant business graduates etc. OPL is
committed to develop its human resources through continuous training and development. We
have a large sales team comprising of 425 professionally trained persons.
Figure: HR function
2.2 Compensation and Benefit of OPL
2.2.1 COMPENSATION:
In financial terms, the salary and wages you pay to your employees for the work they do. Other,
nonfinancial forms of compensation can also be offered to attract and retain staff.
Gary Dessler in his book Human Resource Management defines compensation in these words
"Employee compensation refers to all forms of pay going to employees and arising from their
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employment." The phrase 'all forms of pay' in the definition does not include non-financial
benefits, but all the direct and indirect financial compensations.
Compensation must be defined in a plan for many purposes. Each plan component can use a
different definition of “compensation.” Therefore, a single plan may define compensation
several ways.
Compensation may be used to determine the amount of benefits accrued in a defined benefit plan
or the amount of contributions allocated to accounts for a defined contribution plan.
In addition to calculating the amount of benefits, compensation also places limits on the amount
of benefits or allocations. When a mandatory top heavy benefit arises, compensation is used to
determine the amount of the top heavy benefit. Compensation is also a factor when testing the
plan for non- discrimination.
Finally, compensation is used by the employer when figuring out the deduction limits.
Because the definition of compensation has so many plan applications, it is important to be able
to define and distinguish the requirements for compensation for various plan purposes.
Items which are always required to be excluded from compensation for purposes of are as
follows:
Contributions made by the employer to deferred compensation plans to the extent that the
contributions are not includible in the employee’s gross income.
Distributions from deferred compensation plans. However, any amounts received by an
employee pursuant to an unfunded non-qualified plan are permitted to be considered as
compensation for IRC Section 415 purposes in the year the amounts are includible in the
gross income of the employee.
Amounts realized from the exercise of nonqualified stock options
Amounts realized from the sale or exchange of stock acquired under a qualified stock
option.
Certain premiums for group-term life insurance.
Compensation is based on:
Market research about the worth of similar jobs in the marketplace,
Employee contributions and accomplishments,
The availability of employees with like skills in the marketplace,
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The desire of the employer to attract and retain a particular employee for the value they
are perceived to add to the employment relationship, and
The profitability of the company or the funds available in a non-profit or public sector
setting, and thus, the ability of an employer to pay market-rate compensation.
2.2.2 BENEFITS:
Employees today are not willing to work only for the cash alone, they expect 'extra'. This extra is
known as employee benefits. Also known as fringe benefits, Employee benefits are non-financial
form of compensation offered in addition to cash salary to enrich workers’ lives.
Employee benefits are various non-wage compensations provided to employees in addition to
their normal wages or salaries. In instances where an employee exchanges (cash) wages for some
other form of benefit is generally referred to as a 'salary sacrifice' or 'salary exchange'
arrangement. In most countries, most kinds of employee benefits are taxable to at least some
degree.
Examples of these benefits include: housing (employer-provided or employer-paid), group
insurance (health, dental, life etc.), disability income protection, retirement benefits, daycare,
tuition reimbursement, sick leave, vacation (paid and non-paid), social security, profit sharing,
funding of education, and other specialized benefits.
The purpose of the benefits is to increase the economic security of employees.
Employee benefits are not performance-based, they are membership-based. Workers receive
benefits regardless of their performances. Employee benefits as a whole have no direct affect on
employee performance, however, inadequate benefits do contribute to low satisfaction level and
increase absenteeism and turnover in employees (De Cenzo and Robbins; 2007). So every
company would have to carefully design their benefit package. Company’s package may include
a cell phone to each worker, taking them to a training workshop or seminar, giving them a day or
two off every month and so on. While deciding on the benefits package, do consider the
associated costs.
Employees should be managed properly and motivated by providing best remuneration and
compensation as per the industry standards. It is an integral part of the management of his
organization. Compensation is a systematic approach to providing monetary value to employees
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in exchange for work performed. It may achieve several purposes assisting in recruitment, job
performance, and job satisfaction. (Farhaan Panagar) . The lucrative compensation will also
serve the need for attracting and retaining the best employees. .
Compensation is the remuneration received by an employee in return for his/her contribution to
the organization. It is an organized practice that involves balancing the work-employee relation
by providing monetary and non-monetary benefits to employees.
Susan M. Heathfield has said that compensation is the total amount of the monetary and non-
monetary pay provided to an employee by an employer in return for work performed as required.
Compensation Includes writing job descriptions, conducting performance evaluations, and
monitoring and administering benefits packages. (Anselmo L S Teng).
Compensation is an integral part of human resource management which helps in motivating the
employees and improving organizational effectiveness.
Need of Compensation Management
A good compensation package is important to motivate the employees to increase the
organizational productivity.
Unless compensation is provided no one will come and work for the organization. Thus,
compensation helps in running an organization effectively and accomplishing its goals.
Salary is just a part of the compensation system, the employees have other psychological
and self-actualization needs to fulfill. Thus, compensation serves the purpose.
The most competitive compensation will help the organization to attract and sustain the best
talent. The compensation package should be as per industry standards
Compensation and benefits is a sub-discipline of human resources, focused on employee
compensation and benefits policy-making. (PJ Hayes)
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2.3 ADVANTAGES OF COMPENSATION & BENEFITS
2.3.1 Advantages to Boutique:
A well designed compensation and benefits plan helps to attract, motivate and retain talent in
every firm. A well designed compensation & benefits plan will benefit company’s boutique in
the following ways.
1. Job satisfaction: Employees would be happy with their jobs and would love to work for
company if they get fair rewards in exchange of their services.
2. Motivation: All employees have different kinds of needs. Some want money so they work for
the company which gives them higher pay. Some value achievement more than money, they
would associate themselves with firms which offer greater chances of promotion, learning and
development. A compensation plan that hits workers’ needs is more likely to motivate them to
act in the desired way.
3. Low Absenteeism: Why would anyone want to skip the day and watch not-so-favorite TV
program at home, if they enjoy the office environment and are happy with their salaries and get
what they need and want?
4. Low Turnover: Would company’s employee want to work for any other boutique if they
offer them fair rewards. Rewards which they thought they deserved?
2.3.2 Advantage to Employees:
1. Peace of Mind: Company offering of several types of insurances to the workers relieves them
from certain fears. Then workers as a result now work with relaxed mind.
2. Increases self-confidence: Every human being wants his/her efforts to get acknowledgment.
Employees gain more and more confidence in them and in their abilities if they receive just
rewards. As a result, their performance level shoots up.
The area of Compensation and Benefits belongs to the most specialized areas in Human
Resources Management. Compensation and Benefits usually plays the role of the HR
Controlling, setting the rules and procedures around the salaries, variable pay and benefits.
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Compensation and Benefits is usually the function of HRM most connected with the competitors
on the market and it sets the compensation policies, which are fully competitive on the job
market, but the policies still meet the targets defined by the organization.
The clear definition of processes in Compensation and Benefits is very important as the
processes are under the attacks from the line management every single day. There is no a day
without a pressure for the salary review at the individual employees and the rules and standards
must be waterproof.
2.4 The basic components of employee compensation and benefits
Employee compensation and benefits are basically divided into four categories:
1. Guaranteed pay – monetary (cash) reward paid by an employer to an employee based on
employee/employer relations. The most common form of guaranteed pay is the basic salary.
2. Variable pay – monetary (cash) reward paid by an employer to an employee that is contingent
on discretion, performance or results achieved. The most common forms are bonuses and sales
incentives.
3. Benefits – programs an employer uses to supplement employees’ compensation, such as paid
time-off, medical insurance, company car, and more.
4. Equity-based compensation – a plan using the employer’s share as compensation. The most
common examples are stock options.
Guaranteed pay :
Guaranteed pay is a monetary (cash) reward. The basic element of the guaranteed pay is the base
salary, paid based on an hourly, daily, weekly, bi-weekly or a monthly rate. The base salary is
typically used by employees for ongoing consumption. Many countries dictate the minimum
base salary defining a minimum wage. Individual skills and level of experience of employees
leave room for differentiation of income-levels within the job-based pay structure.
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In addition to base salary, there are other pay elements which are paid based solely on
employee/employer relations, such salary and seniority allowance.
Variable pay:
Variable pay is a monetary (cash) reward that is contingent on discretion, performance or results
achieved. There are different types of variable pay plans, such as bonus schemes, sales incentives
(commission), overtime pay, and more.
An example where this type of compensation plan is prevalent is the real estate industry and real
estate agents. A common variable pay plan might be the sales person receives 50% of every
dollar they bring in up to a level of revenue at which they then bump up to 85% for every dollar
they bring in going forward. Typically, this type of plan is based on an annual period of time
requiring a "resetting" each year back to the starting point of 50%. Sometimes this type of plan is
administered so that the sales person never resets and never falls down to a lower level. It also
includes Performance Linked Incentive which is variable and may range from 130% to 0% as per
performance of the individual as per his KRA.
Benefits:
There is a wide variety of employee benefits, such as paid time-off, insurances (life insurance,
medical/dental insurance, and work disability insurance), pension plan, company car, and more.
A benefit plan is designed to address a specific need and is often provided not in the form of
cash. Many countries dictate different minimum benefits, such as minimum paid time-off,
employer’s pension contribution, sick pay, and more.
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Equity-based compensation:
Equity based compensation is an employer compensation plan using the employer’s shares as
employee compensation. The most common form is stock options, yet employers use additional
vehicles such as restricted stock, restricted stock units (RSU), employee stock purchase plan
(ESPP), and stock appreciation rights (SAR).
The classic objectives of equity based compensation plans are retention, attraction of new hires
and aligning employees’ and shareholders’ interests.
Organizational place
In most companies, compensation & benefits (C&B) is a sub-function of the human-resources
function.
HR organizations in big companies are typically divided into three: HR business partners
(HRBPs), HR centers of excellence, and HR shared services. C&B is an HR center of excellence,
like staffing and organizational development (OD).
Main influencers
Employee compensation and benefits main influencers can be divided into two: internal
(company) and external influencers.
The most important internal influencers are the business objectives, labor unions, internal equity
(the idea of compensating employees in similar jobs and similar performance in a similar way),
organizational culture and organizational structure.
The most important external influences are the state of the economy, inflation, unemployment
rate, the relevant labor market, labor law, tax law, and the relevant industry habits and trends.
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Bonus plans
Bonus plans are variable pay plans. They have three classic objectives:
1. Adjust labor cost to financial results – the basic idea is to create a bonus plan where the
company is paying more bonuses in ‘good times’ and less (or no) bonuses in ‘bad times’. By
having bonus plan budget adjusted according to financial results, the company’s labor cost is
automatically reduced when the company isn’t doing so well, while good company performance
drives higher bonuses to employees.
2. Drive employee performance – the basic idea is that if an employee knows that his/her bonus
depend on the occurrence of a specific event (or paid according to performance, or if a certain
goal is achieved), then the employee will do whatever he/she can to secure this event (or improve
their performance, or achieve the desired goal). In other words, the bonus is creating an incentive
to improve business performance (as defined through the bonus plan).
3. Employee retention – retention is not a primary objective of bonus plans, yet bonuses are
thought to bring value with employee retention as well, for three reasons: a) a well designed
bonus plan is paying more money to better performers; a competitor offering a competing job-
offer to these top performers is likely to face a higher hurdle, given that these employees are
already paid higher due to the bonus plan. b) if the bonus is paid annually, employee is less
inclined to leave the company before bonus payout; often the reason for leaving (e.g. dispute
with the manager, competing job offer) 'goes away' by the time the bonus is paid. the bonus plan
'buy' more time for the company to retain the employee. c) employees paid more are more
satisfied with their job (all other things being equal) thus less inclined to leave their employer.
The concept saying bonus plans can improve employee performance is based on the work of
Frederic Skinner, perhaps the most influential psychologist of the 20th century. Using the
concept of Operant Conditioning, Skinner claimed that an organism (animal, human being) is
shaping his/her voluntary behavior based on its extrinsic environmental consequences – i.e.
reinforcement or punishment. This concept captured the heart of many, and indeed most bonus
plans nowadays are designed according to it, yet since the late 1940s a growing body of
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empirical evidence suggested that these if-then rewards do not work in a variety of settings
common to the modern workplace. Research even suggested that these type of bonus plans have
the potential of damaging employee performance.
Compensation is payment to an employee in return for their contribution to the organization, that
is, for doing their job. The most common forms of compensation are wages, salaries and tips. {W
Lewellen}
2.5 Compensation, Benefits and Services:
Every employee receives the salary as the compensation. The salary varies with the seniority,
position in the hierarchy of the organization. Salary comprises House rent allowance, Traveling
allowance, and Interim allowance. Income tax and Provident fund is deducted from the salary
amount. Other services including housing facility, transportation facility, loan at lower rate of
interest etc. But all of these vary with the hierarchical seniority of the employee in OPL other
benefits include sick leave, pension scheme, capital accumulation plan and insurance.
Employees get bonus two times in a year during two Eid festivals. In every year OPL gives 5%
of benefits o the employees. In the field have the Medical Promotion Officer (MPO) achieve his
sales together he gets 50% incentives. If any Employee achieve him target & in national ranking
if he is 100, there is position of foreign tour. Sometime they receive the annual increments.
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2.5.1 Reward & CompensationComponents of an overall compensation and rewards strategy often include: